MercoPress. South Atlantic News Agency

Latin America stocks bounce back, but fears remain as to the US and EU

Brazil’s Bovespa was up 5.1% in heavy trading after Monday’s 8.08% collapse

Latin American stocks bounced back on Tuesday after suffering their worst day since October 2008, but fears of a US recession and a deeper European debt crisis promise to keep markets edgy.

The MSCI Latin America stock index recovered 2.07% after a steep plunge on Monday capped a nearly 18% slump in the previous six sessions.

Brazil's benchmark Bovespa stock index .Bovespa surged 5.1% recovering more than half of Monday's plunge that pushed the index to its lowest since April 2009.

Commodity stocks led the rebound after taking a beating in Monday's sell off, brought on by concerns about slower global growth that could mean lower demand for raw materials around the world.

In Brazil, mining company Vale (VALE3.SA), the world's biggest producer of iron ore, gained 5.12%. Oil company Petrobras (PETR4.SA) added 2.68%. Banco do Brasil, Latin America's biggest bank by assets, jumped 7.11% after it reported better-than-expected earnings.

Still, traders doubted the recovery held much more steam.

There were a lot of traders covering short positions, rather than confident new buyers,“ said Adriano Moreno of Futura Investimentos in Brazil.

Traders who want to bet stocks will fall borrow shares from other agents when prices are higher, sell them, and then buy the stocks back after they have fallen to replace the borrowed shares, making a profit on the price drop.

“From here on we're expecting less of the volatility, but it's going to take some good news to turn this market around,” Moreno said.

Mexico's IPC rebounded 2.1% as America Movil, a major IPC weight and one of the biggest telecommunications companies in the world, rose 1.32%.

Chile's IPSA gained 5.83% and recovered most of Monday's losses, the second best performance since October 2008. Industrial conglomerate Copec (COP.SN) gained 10% and retailer Falabella FAL.SN rose 7.64%.

Argentina’s Merval jumped 4.58% recovering almost half the historic plunge of Monday. The rebound of the DJI and several Argentine companies and banks profits helped to regain confidence in Latin America’s third largest economy market.

The Peruvian capital Lima’s stock exchange recovered 2.6% on Tuesday after having plummeted 7% on ‘black Monday’. The Lima market reacted to Wall Street’s rebound. Peru with abundant minerals and oil has become one of the fastest growing economies in South America.

Finally Colombia’s market was up 3.02%, after having lost 4.11% Monday. The IGBC now stands at 13.086,20 points. The index has lost 16% since the beginning of the year.

Trading included 6.106 operations with a turnover equivalent to 206 million dollars.